18 November 2008: Detroit's bosses fly private jets to beg for aid
The chief executives of General Motors, Ford and Chrysler appeared before a Senate committee to ask for billions in emergency loans, and it soon emerged that each had flown to Washington in a corporate jet. Lawmakers were not impressed. The executives returned weeks later, driving hybrid cars. GM and Chrysler eventually got rescued, but GM's shareholders were wiped out in bankruptcy the next year.
The lesson: How managers spend money when they are asking for yours tells you a lot.
What it meant for investors
$1,000 in General Motors (old) at the start of 2008 → $0 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2008, the year it happened. General Motors (old) went to zero, so the position is worth nothing at all; the index turned the same money into $4,626.
What General Motors (old) teaches: A famous name and enormous scale offer no protection to shareholders: in a bankruptcy, creditors are paid first and common stock usually goes to zero.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2005 | $40.00 | $0 | $5,763 |
| 2007 | $30.00 | $0 | $4,789 |
| 2008 | $25.00 | $0 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought General Motors (old)? Every starting year and the full story →
More General Motors (old) history
- 12 February 2008: GM reports a $38.7 billion annual loss
- 1 June 2009: General Motors files for bankruptcy
- 19 December 2008: Bush rescues GM and Chrysler
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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